With regard to options, which of the following is not true of the hedge ratio?
A) It indicates the change in the option price for a $1 change in stock price.
B) It represents the ratio of options written to shares held long in a riskless portfolio.
C) It is frequently greater than 1.
D) It is commonly referred to as the option's delta.

Question

Quizplus · Accepted Answer

The hedge ratio, or delta, is typically between 0 and 1 for call options and between -1 and 0 for put options, indicating the sensitivity of the option price to changes in the underlying stock price. It is not frequently greater than 1.

With Regard to Options, Which of the Following Is Not